Alps Industries Ltd Management Discussions

COTTON

YARN - A SIGNIFICANT SEGMENT

pertaining to the Export Promotion Mission being set up by Department of Commerce apart from other textiles export related issues. Although the cotton yarn prices have increased following the rise of ZCE cotton, the market acceptance is still not high. The inventories of cotton yarn and grey fabric are accumulating, but the accumulation speed is not fast, and the overall pressure is not great. In terms of price valuation, on the eve of the tariff war unilaterally initiated by the United States in April, ZCE major cotton contract has been fluctuating narrowly within the range of 13,500 to 13,700yuan/mt for most of the time. Around May10 to 12, with positive macro factors and the withdrawal of some tariffs by both sides, ZCE major cotton contract rebounded and once rose to the level before the decline. From a macro perspective, although both sides have withdrawn some tariffs, compared with the end of March, the United States still imposes an additional 10% reciprocal tariffs on China.

MACRO LEVEL OPPORTUNITIES AND THREATS

The Company has a robust Enterprise Risk Management framework which enables it to take certain risks to remain competitive and achieve higher growth and at the same time mitigate other risks to maintain sustainable results. Under the framework, the Company has laid down a Risk Management Plan which defines the process for identification of risks, its assessment, mitigation measures, monitoring and reporting. While the Company, through its employees and Executive Management, continuously assess the identified Risks, the Risk Management Committee reviews the identified Risks and its mitigation measures annually. Key Strategic Risks include demand destruction, changing customer preference and supply chain disruption due to pandemic, reputational risk, succession planning & business continuity planning. Key Operating Risks include customers credit risk, fluctuating forex rates and raw material prices, cyber security risk, IT system breakdown, concentration of business with certain customers and sustainability. Regulatory Risks include changes in bilateral/ multilateral trade agreements, international trade disputes and regulatory compliances. Our approach to performance management is a holistic one wherein, while holding people accountable, we look at continuous development and create opportunities for them to excel in new and/ or larger roles. Performance dialogues create opportunities.

A. GOVERNMENT POLICIES-TEXTILE SECTOR

The Union Budget 2025-26 announced an outlay of Rs. 5272 crores for Textiles sector for 2025-26. This is an increase of 19 percent over budget estimates of 2024-25 (Rs. 4417.03 crore). To address the challenges of stagnant cotton productivity, Union Budget 2025-26 has announced a five-year Cotton Mission to increase cotton productivity especially extra-long staple varieties. Science & Technology support will be provided to farmers under this Mission. The Mission is in keeping with the 5 F principle and will increase income of the farmers and augment a steady supply of quality cotton. By boosting domestic productivity, this initiative will stabilise raw material availability, reduce import dependence and enhance the global competitiveness of Indias textile sector, where 80% of capacity is driven by MSMEs. To promote domestic production of technical textile products such as agro-textiles, medical textiles and geo textiles at competitive prices, two more types of shuttle-less looms added to the list of fully exempted textile machinery. Duty on Shuttle less loom Rapier Looms (below 650 meters per minute) and Shuttle less loom Air jet Looms (below 1000 meters per minute) for use in textile industry has been made nil from the existing 7.5%. This provision will reduce the cost of high-quality imported looms thus facilitating modernisation and capacity enhancement initiatives in the weaving sector. This will also boost Make in India in technical textile sector viz. agro textiles, medical textiles, and geo-textiles. Basic Custom Duty rate on knitted fabrics covered by nine tariff lines increased from "10% or 20%" to "20% or Rs.115 per kg, whichever is higher"" This will improve competitiveness of Indian knitted fabric manufacturers and curb cheap imports. To facilitate exports of handicrafts, time period for export extended from six months to one year, further extendable by another three months, if required Handicraft exports will benefit from this provision extending the list of items and the time period for conversion of duty-free raw material imports meant for export production. Nine items including wool polish materials, Sea shell, Mother of Pearl (MOP), Cattle horn etc. added to the list of duty-free inputs. 80% of Indias textile sector is in MSME. Budget thrust on export, enhanced credit and coverage will uplift textile MSMEs. Other announcements like creation of National Manufacturing Mission,

Export Promotion Mission, creating the Bharat Trade Net, Fund of Funds, Measures for LabourIntensive Sectors to promote employment and entrepreneurship opportunities, revision in classification criteria for MSMEs and others will create conducive environment for the textile sector.

II. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

In terms of the Ind AS, there is only one reportable segment i.e., Textile Segment. Hence the segment wise reporting is no applicable.

III. OUTLOOK AT LARGE

The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid Growth in the past decade with the entry of several international players. Manufacturing activity and trade growth continued to be low key. The year was marked by geopolitical tensions and trade-war rhetoric mainly between the US and China & Russia and Ukraine. This clearly reflected in reduced confidence on the future of the global trading system and international cooperation, and impacted investment decisions, and global trade. Several economies signaled and adopted an accommodating monetary policy which cushioned the impact of global tensions on financial market sentiment and activity.

IV. RISKS AND CONCERNS

Raw Material Price Risk: Cotton are the major raw materials used by the Company for textile. Volatility in prices impacts the overall cost of production, and thus, the profitability.

Currency Risk: As the Company deals in the international market, it is exposed to currency volatility, which impacts the overall revenue of the Company.

Geographical Risk

Concentration in a particular territory leads to a depleting market presence of the Company. Policy Risk

Implementation of any policy which is not in favour of the Company hampers the operations of the Company.

Competition Risk

There are many emerging countries, where production costs are relatively lower than that of India. This poses a potential threat to the Company.

Mitigation Strategy

• Strong relationship with vendors and proximity to the raw material sources ensures easy availability. The Company also plans to save land costs and inventory management keeping in view the historical cycle of input prices. From time to time, the Company hedges raw-material against order book.

• Currency risks are managed by constant monitoring exposures and limiting the same in view of applicable margins under the relevant Market engagements. Also, some portion of the foreign currency is hedged to mitigate any adverse movements in currency fluctuations.

• The Government of India has come up with various incentives such as rebate on state levies, duty drawback, and ATUFS, among others. The Company has leveraged on these initiatives to stay ahead in the market.

• The Company benefits out of economies of scale, cutting-edge technology, and loyal partnerships to offer competitive rates to its clients across the globe.

V. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

High accuracy in recording and providing reliable financial & operational support is ensured through stringent procedures. The Companys internal team and Audit Committee monitor business operations and any deviations are promptly brought to the notice of the Management board. These findings provide input for risk identification and assessment, post which prompt risk mitigation strategies are deployed towards a seamless growth of the Company. Internal audit process verifies whether all systems and processes are commensurate with the business

size and structure. Adequate internal control systems safeguard the assets of the company with timely identification and intervention to assuage risks. The internal audit report is discussed with the senior management and members of Audit Committee to keep a check on the existing systems and take corrective action to further enhance the control measures. Regular internal audits and checks are carried out to ensure the robustness of the system. The Management also reviews from time to time the internal control systems and procedures to ensure their proper application. The emphasis on internal controls prevails across functions and processes, covering the entire gamut of various activities.

VI. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During current Financial Year under review your company has recorded the total income of Rs. 60.85 Lakh as compared to previous financial year of Rs. 567.35 Lakh. Company has recorded a negative EBIDTA 61.94 Lakh (previous year negative EBIDTA of 268.03 Lakh) and a negative PAT of Rs. 6399.04Lakh (previous year negative PAT Rs. 5623.85 Lakh).

VII. MATERIAL DEVELOPMENTS ON HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The company has been consistently maintaining harmonious & cordial relations with the employees. The Company continues to lay emphasis on building and sustaining culture of larger family, caring & supporting each other. During the year, with consistent review and efforts for optimization of available manpower resources, no. of employees were 2 excluding Managing Director at the end of the year as compare to 7 last year. However due to downfall in the manufacturing facilities and non-availability of operative assets/finances, company could not continue with the employee strength in current year.

VIII. MEDIUM-TERM AND LONG-TERM STRATEGY

In terms of SEBI/HO/CFD/CMD/CIR/P/2018/79 May 10, 2018 the disclosure of Medium and Long-term strategy of the company, for the next financial year ending on March 31, 2026 is within the limits set by its competitive position. However the company is struggling to maintain the same level of its business as no operative assets remain with it and company is under CIRP proceedings under IBC.

IX. STATUTORY COMPLIANCE

The concerned HOD makes a declaration at each Board Meeting regarding the compliance with the provisions of various statutes, after obtaining confirmation from all the units of the company. The Company Secretary ensures compliance accordance to SEBI regulations and provisions of the Listing Regulations.

X. DETAILS OF SIGNIFICANT CHANGES

XI. CAUTIONARY STATEMENT

The Management Discussion and Analysis Report containing your Companys objectives, projections, estimates and expectation may constitute certain statements, which are forward looking within the meaning of applicable laws and regulations. The statements in this Management Discussion and Analysis Report could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operation include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in the Governmental regulations, tax regimes, forex markets, economic developments within India and the countries with which the Company conducts business and other incidental factors. The Management has made these statements based on its current expectations and projections about future events. Wherever possible, it has tried to identify such statements by using words such as ‘anticipate, ‘estimate‘ expect, ‘project, ‘intend, ‘plan, ‘believe and words of similar substance. The management cannot guarantee that these forward-looking statements will be realized, although it believes that it has been prudent in making these assumptions.